HR 3424, known as the Reinsurance Tax Bill or the Neal Bill (after sponsor Richard E. Neal (D-MA)), is being debated by the U.S. House of Representatives Ways and Means Committee.   This legislation, aimed at transactions between U.S. insurers and their related foreign entities, would restrict the amount that a property & casualty insurance company may deduct for premiums paid for reinsurance.

Proponents of the legislation claim that allowing these deductions creates a “tax loophole” as those who write coverage in the U.S. are allowed to deduct the amounts they pay to reinsurers, mainly in Bermuda.  Supporters claim that closing this loophole will recapture an estimated $17 billion of revenue for the U.S. Treasury.

Detractors charge that taking away the reinsurance premium deduction is discriminatory and would raise reinsurance rates charged to U.S. companies, and ultimately require U.S. consumers to pay more for their insurance.  They claim that home insurance costs would increase $266 million for Floridians, $112 million for Texans, and $28 million for Louisiana residents.

Tell us what you think. Should this tax loophole be closed? Left open but modified? Left as it is?

A study by Gartner Research published in a recent issue of National Underwriter magazine analyzes the 10 technologies most likely to have a significant impact on property and casualty insurance.  Those 10 items are:

• Modern Policy and Claims Management Systems
• Web Service and Service-Oriented Architecture (SOA) Tools
• Business Intelligence and Analytics
• Predictive Modeling Tools
• Advanced Fraud Detection Solutions
• Web 2.0 and Social Networking Technology
• Product Development and Configuration Solutions
• Business Process Management (BPM) Solutions, including Workflow and Rule Engines
• Portal and Internet Technologies
• Mobile Devices/Technologies

Which of these do you think will be of the most value to the property and casualty insurance industry? What plans do you have to implement new technologies (these or others)? Let us know.

On the cusp of summer, as forecasters predict an active hurricane season, it is timely to compare and contrast the property and casualty insurance market in two states that often bear the brunt of severe tropical weather activity, Louisiana and Florida. 

A recent article from Insurance News Net paints a picture of the upbeat forecast for the insurance market in Louisiana stemming from legislation passed in 2007 aimed at attracting new insurers and decreasing the reliance on the state’s insurer of last resort.

Contrasting that, SNL is reporting that an increase in insolvencies in the Florida insurance marketplace, potential rate declines, and an uncertain political and regulatory situation are scaring the insurance industry in the Sunshine State.  And that is in addition to the possible increase in severe weather this hurricane season.

In both states, the current economic situation in has created a surge in the stress related to employment and home values, which has led to a rapid increase in the frequency and size of non-catastrophe type losses since the end of 2006.  This erodes profit from insurers in these non-hurricane years when they should be earning large underwriting gains to finance future storms.

What are your thoughts on the insurance industry in Louisiana and Florida?  Does Florida need to take a page from the Louisiana play book to bolster their insurance industry? Let us know.